TIDMLAKE
RNS Number : 9450F
Lakehouse plc
02 August 2016
PRESS RELEASE
2 August 2016
Lakehouse plc
("Lakehouse" or "the Group")
Trading Update and Lakehouse awarded GBP37m domestic smart meter
contract with Scottish Power ("the Contract")
Lakehouse, the asset and energy support services group, today
provides an update on trading, together with the announcement of a
major contract win.
Trading Update
At 30 June 2016, the Group had an order book of GBP596m, GBP633
million including the Contract which is broadly in line with the
GBP636 million reported in the Interim Results for the six months
ended to 31 March 2016 (which were published on 17 May 2016)
("Interim Results").
As reported in the Interim Results, the Board remains focused on
resolving performance issues in the Regeneration division. This
includes a number of contract settlements on which there is a range
of potential outcomes for the Group, both in terms of cash flow and
impact on the Income Statement. Management anticipate there are
likely to be further write-downs, during the current financial year
as we seek to close out these issues with clients. Based on current
discussions, this is expected to have an adverse impact of GBP4
million in the current financial year.
The Board notes the ongoing consultation concerning the UK
Government's policy on Energy Company Obligations, which is due to
enter its third phase on 1 April 2017. The outcome of this
consultation is crucial to determining the levels of funding and,
as importantly, the types of works that will be funded. We remain
in active dialogue with Government over the future direction of
policy on energy efficiency, which we see as critical to achieving
the legal obligations the UK has to deliver carbon savings and will
influence the Board's overall outlook for the Energy Division.
Elsewhere in the Group, underlying trading and order visibility
remains generally strong in our Compliance and Construction
divisions, subject mainly to the timing of project work. The Group
continues to invest in areas of growth and a programme has begun to
reduce and re-assign headcount in certain operational and support
functions to better align costs and staff levels with the Group's
future plans.
As at 30 June 2016, the Group's net debt was GBP30.6 million,
comprising GBP28 million drawn from its GBP45 million revolving
credit facility, together with an overdraft of GBP2.6 million drawn
from its GBP5 million facility.
Contract Win
The Group is pleased to announce the award of a GBP37m contract
with Scottish Power for the installation of domestic smart meters
across Northern Scotland, Wales and North West England. The Group
expects to install more than 450,000 meters over the course of the
Contract's five year term.
The Contract will mobilise during the remainder of the current
financial year to 30 September 2016, with the Group making an
investment of approximately GBP1.5 million in the current financial
year to mobilise and train more than 100 dual fuel engineers. In
accordance with the Group's accounting policy, all mobilisation and
training costs will be expensed as incurred.
The Group has been successful in securing further contracts with
three leading utilities for domestic meter installation and
negotiations are ongoing with another two. This diversification
will involve a rapid transition of the business into Domestic meter
installation services, which the Group expects will involve a cost
of GBP1 million in the current financial year, as we redeploy and
retrain existing staff. This reflects a recent decision by the
Group's existing major metering customer to take installation in
house, following a number of acquisitions among our
competitors.
In light of such a rapid transformation exercise, the Group
expects the year ending 30 September 2017 to be one of
consolidation for its metering activities, as we seek to deliver
top quartile performance for our clients on the above
contracts.
The Group is encouraged by demand in the metering market, which
is expected to contribute an important element to the Group's
future growth agenda. The Board considers the Contract to be an
important step in the ongoing diversification of the Energy
Services division, consistent with the aim of reducing its reliance
on Government energy subsidies.
General meetings and management changes
The Group anticipates that the cost of and events surrounding
the two general meetings held in April and August 2016, together
with the exit arrangements (in line with contractual obligations)
of certain executive members of management, will cost GBP1.5
million.
Outlook
The Group is disappointed to report that the outlook for the
current financial year is significantly below its previous
expectations. This reflects a number of one-off and non-recurring
items, upon which the Board feels it is important to take immediate
action. The actions are expected to help restore shareholder value
in the medium term and the Board remains confident in the
opportunities and prospects for the Group, notwithstanding a
challenging and difficult year to 30 September 2016.
Bob Holt, Executive Chairman, said:
"We are delighted to have secured this significant contract for
our meter installation activities as well as significantly
expanding our relationship with Scottish Power. This is an
important award in helping to diversify our Energy Services
division, reducing its current level of reliance on energy
subsidies and particularly the Energy Company Obligation, a policy
currently being consulted on by the UK Government.
Elsewhere in the Group we are making progress and taking action
on a number of operating challenges in the Group, especially on
contract settlements within the Regeneration division. As
previously reported, the Board remains very focused on restoring
shareholder value."
Michael McMahon, Executive Director Lakehouse plc and Managing
Director Lakehouse Energy Services, said:
"The successful award of the Contract reaffirms our strategy of
becoming a first tier supplier of metering technology and we are
making good progress in mobilising the contract. Our specialist
metering company Providor, which was acquired in May 2015, will
benefit as a result of this award as part of our plan for further
growth underpinned by excellent customer service levels.
We are particularly delighted to extend and strengthen our
relationship with Scottish Power and are committed to building
these strategic relationships for long term value."
ENDS
Enquiries:
Lakehouse Telephone: 01708
758 800
Bob Holt, Executive Chairman Telephone: 07778
798816
Michael McMahon, Executive
Director
Jeremy Simpson, Chief Financial
Officer
Financial Public Relations
Camarco Telephone: 0203
757 4992
Ginny Pulbrook
Tom Huddart
Notes to Editors:
Lakehouse is an asset and energy support services group that
constructs, improves, maintains and provides services to homes,
schools, public and commercial buildings with a focus on clients in
the UK public sector and regulated markets. Services are delivered
through four divisions: Regeneration, Compliance, Energy Services
and Construction. The Group was founded in 1988 and is
headquartered in Romford, Essex. It currently employs more than
2,400 staff from 34 offices across the UK.
This information is provided by RNS
The company news service from the London Stock Exchange
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